Do you need a pre-nup?

Nobody enters a relationship thinking it will fail, but it doesn't hurt to have a financial agreement in place, just in case.

If you’re thinking about marriage or your relationship is getting serious, it’s important to discuss your attitudes to money with your partner.

By considering your current financial situation - including any assets or debts you may each be bringing to the table - you’re setting a solid foundation for the future.

Taking things one step further, you may consider using a pre-nup – or pre-nuptial agreement – to help clarify what might happen to your assets should your relationship not stand the test of time.

What is a pre-nup, anyway?

You’ve probably heard the term ‘pre-nup’ on US TV shows or movies; in Australia it’s known as a financial agreement.

A financial agreement is a contract that sets out how you intend for your property and assets to be divided if your relationship breaks down.

Most people think these agreements need to be put in place before getting married, but financial agreements can be entered into before, or during, a relationship, and they can be made between partners in both married and de facto relationships – including same sex relationships1.

While financial agreements are not always binding, if your relationship fails, it can help make the division of your assets and liabilities less complicated.

Why might we need one?

Recent figures show that while the number of Australians getting divorced has fallen, one in three marriages in Australia still ends in divorce.2

The financial fallout of divorce means reduced savings and assets, and on average it takes around five years for individuals to recover financially after going their separate ways.3

Given these statistics, it makes sense to protect yourself.

Financial agreements can be especially useful if one of you is bringing more assets to the relationship than the other, or if one partner is in line to receive a substantial inheritance.

They can also make sense if either one of you - or both - has children from a previous relationship you want to protect financially, or if you want to try to avoid going to court if your relationship ends.

How do we set up a financial agreement?

A valid financial agreement can be drawn up by an experienced family lawyer.

It must comply with strict legal requirements and you need to prove that both partners received individual legal advice before signing the agreement.

However, there are circumstances where a financial agreement can be overturned. For example, if a change in circumstances has occurred since the agreement was drawn up, such as the birth of a child, or if the agreement is found to cause hardship on a spouse, especially if they are caring for a child.4

Next steps

With research indicating that disagreements about money are a major cause of divorce, a good place to start is to discuss your goals - both financial and personal - with your partner to see if they align.

Our new AMP Bett3r Account can help you control your budget and set savings targets to reach your goals, and by logging into My AMP you can create an overview of your finances across your various bank, credit card, loan, superannuation and investment accounts by adding your non-AMP accounts.

For more information about financial agreements, speak to your financial adviser. If you don’t have a financial adviser, our online tool can help you find one.

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Any advice in this page is general in nature and is provided by AMP Life Limited ABN 84 079 300 379 (AMP Life). The advice does not take into account your personal objectives, financial situation or needs. Therefore, before acting on this advice, you should consider the appropriateness of this advice having regard to those matters. AMP Bett3r Account is issued by AMP Bank Limited ABN 15 081 596 009, AFSL 234517. Consider the terms and conditions available on request by calling 13 30 30 or at amp.com.au/bett3r and whether this product is appropriate for you. Fees and charges apply.

Although the information is from sources considered reliable, AMP does not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any decision. Except where liability cannot be excluded, AMP does not accept any liability for any resulting loss or damage.